As incomers increasingly choose to make the Principality their main base, demand for large apartments is particularly high, finds Carla Passino.
The sun keeps shining on the Monaco property market. The past few years have seen consistent growth in either sale volumes or prices—or both. ‘We’ve had good, sustained growth,’ says Irene Luke of Savills. ‘Indeed, 2014 was a bumper year, with some €2.4 billion worth of sales. Last year was a little less at €2.25 billion, but still very good. We have no figures yet for 2016, but we have definitely had a great start. Demand is good and activity pretty strong.’
The average price per square metre for resale property was in the region of €36,000, making Monaco the second most expensive location in the world after Hong Kong. ‘In 2006, the average price per square metre was about €15,000,’ points out Jean-Yves Le Graverend of John Taylor Monaco. ‘Since then, it has more than doubled, but it has done so in 10 years: this is a market that goes up, but goes up quietly, and this makes it really resilient.’
There are many factors that underpin growth. ‘People love the sea, the weather, the security, the lifestyle, the favourable fiscal regime and the fact that Monaco is very central in Europe—you can get anywhere very quickly,’ says M. Le Graverend. The weak Euro, which has made local property more affordable than in the past for much of the global elite, was also an attraction at the end of 2015, although, say agents at Pastor Immobilier, this has lessened over the course of 2016.
At a time when Europe is experiencing uncertainty, however, the strongest market driver is perhaps Monaco’s track record of political, fiscal and financial stability. ‘Monaco is safe for you, your family and your money,’ says agent Caroline Olds.
In particular, changes to the non-domiciled status in Britain are prompting many foreign residents to leave the UK in favour of the sunny Principality. British residents, adds Mrs Luke, are often looking at moving not only their family, but also their home office out of the UK and this is creating fresh interest in local office space.
The British and other Northern Europeans make up the single largest client group for Monaco agents Pastor Immobilier, followed by the Russians. The Southern European contingent also remains strong, with many buyers hailing from Italy and Greece. It also helps that the Principality has a strong maritime tradition, leading many Greek expatriates to consider relocating the headquarters of their shipping businesses.
Other buyers are fleeing the turmoil in the Middle East. ‘They’re all about minimising risk to their family and their assets,’ explains Edward de Mallet Morgan of Knight Frank. He also reports that Far East Asians, who had never been very active in Monaco in the past, are coming in growing numbers: ‘We’re seeing them more and more.’
Many of these international buyers now want to make the Principality their primary family home. ‘The demographic is changing,’ explains Mr de Mallet Morgan. ‘There are more young professionals who are attracted by Monaco’s lifestyle, good schooling and the opportunity to bring up children in a wonderful environment.’ This has driven demand for larger, preferably new-build properties. Historically, these were in short supply in Monaco, but the past few years have seen a spurt in renovations and new-builds—195 new properties were completed in the Principality in 2015, according to a report by IMSEE.
‘The one issue with Monaco was its ageing housing stock: people didn’t necessarily have to upgrade their property to sell it, so buyers had to put up with something last done up in the 1970s,’ says Mr de Mallet Morgan. ‘The difference now is that Monaco has both large and boutique developments.’ As an example of the type of property that buyers seek, he mentions a panoramic apartment in Port Hercule, which had been beautifully done in Scandinavian style and was sold for a figure above €6 million.
However, agents lament that many of these newly built or redeveloped properties have now been bought and there is once again a shortage. Several new developments in the pipeline won’t be completed for another few years and many of those upcoming units may be to let rather than for sale.
‘Buyers ask me for a two-bedroom apartment with a view,’ says M. Le Graverend. ‘They’re happy to pay the average price per square metre and, if the view really adds something, even a little more than average, but what they’re looking for is very hard to find. We need more apartments to rent and sell—only this will ease the market.’
Instead, 2016 has seen a good crop of villas for sale—Mrs Olds, for example, has 10 on her books. These can sometimes need work, but usually have beautiful architecture and protected views, plus, says Mr de Mallet Morgan, ‘if you want to be in Monaco and want your family to live there, this is one of the few opportunities to create something that feels like home’.
Interest in family properties is also pushing traditionally less sought-after areas of Monaco into the limelight. ‘An area such as Fontvieille, with its lovely village atmosphere, views of the Rock and quieter feel is good for families,’ notes Mr de Mallet Morgan. ‘People who have lived in Monaco for a long time tend to stick up their noses at these more peripheral areas, but Monaco is a small place and it takes 15 minutes to walk from the outskirts to the centre—no big deal if you’re used to London.’
The Principality is responding to the rise in international demand with significant investment, geared both at improving public areas and creating much-needed housing stock of the size and quality required by global buyers. The regeneration of the area around the Casino and the new yacht club designed by Foster & Partners are two examples of the government’s desire to make Monaco’s public spaces rival the best in the world.
The jewel in the crown of the local investment programme is the land-reclamation project that was signed off at the end of July 2015. This will create an offshore district of about 14.8 acres off the area of Larvotto and will include 60,000sq m of business and residential space, plus a park, a marina, a seafront promenade and public facilities.
Demand for local property is such that Monaco agents are already receiving enquiries for the homes that will be built on reclaimed land, even though the official timescale estimates completion in 2025. ‘People are already asking me if they can look at the plans, even though that’s absolutely not possible at this stage,’ says M. Le Graverend.
Despite this voracious appetite, however, those buying in Monaco are extremely savvy about pricing. ‘They really do compare and check the price per square metre,’ explains M. Le Graverend. ‘Properties in Monaco are expensive and people are very careful, so the asking price needs to be right.’
This is particularly true at the very top end of the market, which is moving a little more slowly than the rest, according to Mrs Olds. The big spenders from Russia and the former CIS are fewer than in the past, mak- ing sales above €10 million rather more sluggish. This, continues Mrs Olds, creates an excellent opportunity to buy bigger properties at good value: ‘If people have big families and want to move to Monaco, now is the time to start looking.’